Trade Minister Craig Emerson said on Thursday that free trade talks between Australia and China have hit a deadlock.

As AFP reports, Emerson told the Global Food Forum in Melbourne yesterday that the Gillard government will not accept China’s demand that Australia lift its threshold on reviewing the purchase of assets by foreign states from zero to Aus$1 billion.

"China is saying, at this stage, non-negotiable, you've got to go from zero to Aus$1 billion (US$1.03 billion)… so that's where we're stuck," Emerson said.

He said that the Australian community would not accept such a deal.

Foreign investment is overseen by the Foreign Investment Review Board (FIRB) which currently reviews every investment by state-owned enterprises from any country as well as investments from the private sector of $248 million or more.

As the Australian reports, Emerson said that a comprehensive trade deal with China was "just beyond both countries". Instead, the government was "build a foundation" with a focus on agriculture.

New Zealand signed a similar deal with China five years ago which has resulted in New Zealand tripling its exports to China.

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